The Costs of Owing a GeoExchange System

 

Operating and Maintenance Costs

 

More than two thirds of the energy produced by a GXS is free energy drawn from the ground. It is easy to see why the energy costs can be much lower with a GXS than with any other fuel, including natural gas. Also, earth-based system maintenance costs are generally lower than those for a conventional heating and air-conditioning system. There are good reasons for this. A conventional air-conditioning system includes an outdoor unit used to expel heat from your home. This unit bears the brunt of the often severe Canadian weather conditions that alternate between snow and ice in the winter, and heat and humidity in summer. It is also subject to the movement of the ground around your home.This can put stress on the refrigeration lines. Air-source heat pumps are subject to even more stresses than airconditioning units because they are expected to operate year-round.

The heat exchangers of fossil fuel furnaces are subjected to temperature extremes when they operate. They eventually crack from the expansion and contraction of the metal. 

The conditions under which an GXS operates are much less severe. The temperatures of the heat source and heat sink (the loop) are lower and more constant than those in a conventional air conditioner or air source heat pump. The temperatures in the heat pump are certainly less extreme than the flames of a fossil fuel furnace. This puts less stress on the equipment, and so results in less maintenance. The loop itself is subject only to the relatively constant temperatures of the earth. Again, very little stress is placed on the pipe, which is virtually maintenance-free.

Again, the air filter of a GXS using a forced-air system must be cleaned or changed regularly, as with any forced-air heating equipment.

Purchase Costs

 

The cost of installing a GXS can vary significantly in different parts of the country. Typically, the cost of the heat pump itself is about the same as that of a conventional furnace and air conditioner. The cost of installing the heat pump can actually be somewhat lower, as it eliminates the costs of gas line connections, the chimney and a pad for the installation of the outdoor airconditioning unit. 

The cost of installing the ductwork for a GXS should be similar to the cost of ductwork for a conventional system. The cost of installing the distribution system for a hydronic system may be slightly higher than that of a gas boiler, however, because the lower water supply temperatures from a GXS may require the installation of more floor heat pipe or a larger radiation system.

The major difference in cost between a GXS and a conventional heating and air conditioning system is the cost of the loop. This can vary significantly from one location to another.

The Payback

 

One of the questions people often ask is, “If I buy a GXS, what’s the payback?” There are many factors that can influence the payback. We can illustrate it by looking at the following example.

Jim and Donna are planning a 160m2 house on a large suburban lot. They want to heat their home as inexpensively as possible. Natural gas is not yet available, but there has been talk of extending the gas lines past their property in the next year or two.

They are considering an electric furnace, a propane furnace that can be converted to natural gas in a year or two, and a GXS. Here are the quotations for all three options.

Electric furnace and air conditioning
 $9,000
High-efficiency propane furnace and air conditioning
$11,000
GeoExchange System$23,000

 

The estimated annual fuel costs are as follows:

  Heating Cooling Hot Water
Total
Electric furnace $1,980
$195 $452
$2,627
High-efficiency propane furnace $2,660
 $195  $607  $3,462
High-efficiency gas furnace  $1,213  $195  $276  $1,684
GeoExchange System  $619  $94  $283  $996

 

A simple payback is easy to calculate. Simply subtract the cost of installing one system from the cost of installing the GXS, and divide by the fuel cost savings. For example, 

GeoExchange System
 $23,000
Electric furnace and air conditioning  $9,000
Difference in cost
$14,000

 

The simple payback is $14,000 ÷ ($2,627 - $996) = 8.6 years.

A cash-flow analysis shows you your cash outlay each year for owning and operating a system. If you are financing the cost of your home over a 20-year period, the cost difference to install the heating and air conditioning system is financed as well. For example,
 

  Coûs de l'énergie Principal et intérêt annuels (5%)
Total
Electric System
 $2,627
$712.80 $3,339.80
GeoExchange System
$996
 $1,821.48  $2,817.48
Annual cash-flow saving with a GeoExchange System  $522.32


The difference in annual energy costs more than makes up the difference of the higher initial cost of installing the GXS. When you take into account your monthly mortgage payments and the monthly energy costs of both systems, you end up with an extra $43.53 ($522.32 ÷ 12 months) in your pocket every month.

Of course, when you take inflation or rising fuel prices into account, your savings are even higher.

A life-cycle cost calculation takes the cash-flow analysis a few steps further, by adding the cost of inflation on fuel, the cost of replacing your equipment at the end of its expected life, the cost of borrowing the money to install the system and other costs. These costs are typically estimated over a 20-year period and are relatively complex to calculate. But the following points are worth noting:

  • The estimated life expectancy of the heat pump in a GXS is approximately 18 to 20 years, or about the same as a conventional furnace. A conventional air conditioner or air-source heat pump can be expected to last only 12–15 years, because the outdoor unit is exposed to the weather. 
  • The earth loop can be expected to last 50–75 years. Even if the heat pump needs replacement after 20 years, the earth loop can be expected to last much longer.
  • If the cash-flow analysis shows that your annual savings are $522.32 per year now, inflation will increase the value of the savings with the fuel inflation rate.
  • If you were to invest the annual cash-flow savings in an RRSP at 2.5% interest, assuming an annual inflation of 2.5% on the energy costs, the annual cash-flow savings of your geoexchange system would grow to be worth $24,402 after 20 years.

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